Question

1. Use this information to prepare a financial statement for company ABC Co for the 12 months ended 31st December 2019

Distribution expenses
Salaries and wages related to selling product Advertisements and promotions for Product Salaries and wages for administrative staff
Office supplies expenses
administrative utility expenses
Depreciation on office equipment
Interest expense
Cost of direct material purchase for product Alpha

Cost of stock at the beginning of the period Alpha

Cost of stock at the end of the period Alpha

Revenue from sale of Product Alpha

$ 8,000
$ 16,000 $ 5,000
$ 7,500
$ 1500
$ 3000
$ 750
$ 1500
$ 165,000

$ 15,000

$ 20,000

$ 312,500

Based on the above information prepare a basic financial statement and identify the following.

i.Gross Profit (3)
ii.Total operating expenses (Show separately your selling distribution expenses and administrative expenses) (3)
iii.Operating income (3)
iv.Net income (Assume your business is taxed at 4%) (3)
v.Correct Income statement with clear separation of items (4)

Answer 1

(i). Gross Profit Computation:

(ii). Operating Expenses:

(iii).

(iv).

(v).